February 14, 2008

Saber’s Fichera Says Muni Bond Market Needs More Transparency

By Carol Massar and Mina Kawai

Joseph Fichera, chief executive officer and senior managing director of Saber Partners LLC in New York, comments on his concern for the failure of some U.S. municipal bond auctions to attract enough buyers. He spoke in an interview.

Rates on $100 million of bonds sold by the Port Authority of New York and New Jersey, with bidding run by Goldman Sachs Group Inc., soared to 20 percent on Tuesday from 4.3 percent a week ago, according to data compiled by Bloomberg.

On the failure of some municipal bond auctions to attract buyers:

“The concern is that there aren’t enough investors in order to make sure that the auctions succeed, and that all investors who have put their bonds up for sale actually have them sold.”

“I think you need to have more transparency in terms of the market, so that investors can judge liquidity risks and so that people, both retail investors and corporate investors, can decide where they want to put their money and get yields.”

On student loans:

“That’s getting caught up in the structured market problem,” and “you might be saying `I might want to stay away from those,’ or demand a higher yield, or have other information about that. But why should this spill over to the Port Authority of New York and New Jersey? Why should it spill over to other people that have very high credit ratings? It doesn’t make a lot of sense. We need a lot more information.”

–With reporting by Amy Muscato in New York. Editor: Joe Sabo, James Kraus

To contact the reporters on this story:
Carol Massar in New York at +1-212-617-1715 or cmassar@bloomberg.net;
Mina Kawai in New York at +1-212-617-8525 or minkawai@bloomberg.net.

To contact the editors responsible for this story:
Patrick Sheridan at +1-212-617-5102 or psheridan1@bloomberg.net;
JoAnne Norton at +1-202-624-1977 or jnorton@bloomberg.net.